FOMO or Accumulation?
Source: Glassnode. Click on chart to enlarge view.
The "smart money" players in crypto typically don't hold their coins in their exchange wallets for security and long-term storage purposes. Substantial withdrawals in these exchange balances, as we've just witnessed, are one of many strong signals that these same players are stepping up, accumulating coins, and moving them to long-term storage to HODL.
In essence, this reinforces the entire accumulation period that's taken place for the last few months.
And here's a glimpse into the balances themselves of Bitcoin within exchange wallets:
We've inverted the exchange balances (green line) so it tracks with Bitcoin.
While Bitcoin has been consolidating in this range for the last 2-months, coins have gradually been scooped off exchanges and presumably into cold storage. Yesterday's major withdrawal is perfectly in line with the accumulation that's been taking place for some time.
Another metric that's caught our attention is the selling pressure from long-term investors, or lack thereof in this case:
This is simply evaluating whether there's an influx of old and dormant coins coming back into circulation to be sold.
It's calculated by taking the number of Bitcoins transacted every day and multiplying it by the number of days since those coins were last spent. So big spikes in this metric essential signal that a lot of old coins are being spent (presumably to be sold).
This distinct lack of coin days being destroyed in the face of this rapid 40% gain indicates the absence of sell pressure from long-term holders right now.
It's classic that right as all of this is taking place, sentiment's been seriously washed out.
Remember earlier this year when everyone jumped on the bandwagon to learn about what these cryptocurrencies and yield farming were all about?
The public doesn't want anything to do with this space now:
Source: The Block. Click on chart to enlarge view.
Nothing like price to change sentiment, right?
So is this a FOMO rally where smart money are using the "diamond hands" people as exit liquidity or is this accumulation from long-term investors?
The data in front of us right now definitely leans to the latter.
Bitcoin is well above our risk level of 30,000 and is banging up against new multi-month highs...
The bottom line, if Bitcoin's above 30k, we're still sticking to our current strategy.
For those that missed it, you can download this week's chartbook featuring nearly 150 crypto-related assets here.
And you can also download our full, in-depth leadership scan we published on Monday here.
To wrap up, here's today's performance recap:
Be sure to let us know if you have any questions at all.
Allstarcharts Team